The government has drastically slashed interest rates of small savings to align them closer to market rates. The popular Public Provident Fund (PPF) will yield 8.1% from April 1 compared with 8.7% at present and Kisan Vikas Patra will fetch 7.8% against 8.7% now. The five-year National Savings Certificate (NSC) will get an annual return of 8.1% against 8.5% and Sukanya Samriddhi Account will fetch an interest rate of 8.6% as against 9.2% at present. The rate will be reset every quarter based on the average month-end G-sec rates of comparable maturity in the preceding three months.
At present, post office term deposits of one, two and three years fetch an interest rate of 8.4% but from April 1, a 1-year term deposit will get 7.1%, 2-year deposit will earn 7.2% and 3-year deposit will attract interest of 7.4%. The five-year fixed deposit will fetch 7.9% as against 8.5% at present.
